Newly formed industry consortium Japan Contents Group (JCG) plans to launch Bonobo, a Transactional Video on Demand (TVoD) service in Q4 2015. JCG comprises 29 companies and organizations, including film studios, TV broadcasters and associations such as the Motion Picture Producers Association of Japan (Eiren), Japan and International Motion Picture Copyright Association and the Distributors Association of Japan. As such, rights holders will control the selection and pricing of titles available from the service whilst PacketVideo, a subsidiary of mobile operator NTT Docomo, will manage the entertainment content platform.

Bonobo will provide new release films, music videos, TV shows and Japanese and foreign animation content for TV viewers and users of PC and smart phone devices. Users may purchase content on a pay-per-view basis without membership registration. The website will also provide information on theaters and film-related packaged products.

Our analysis:

Bonobo will face fierce competition in the Japanese streaming market where it will be competing for viewers against established online video service providers including Unext, Gyao, Hulu, Showtime and AcTVila as well as global online video service giant Netflix, which also plans to launch its service in Japan in Q4 2015. In addition, major mobile operators – SoftBank, NTT Docomo and KDDI – also run online video services in Japan. IHS expects the increasing number of VoD services to push up the price of rights in the Japanese market.

However, Bonobo is likely to be a formidable competitor given the ability of its rights holders to set the price of its content. This may lead to lower rates for users of the service and could bring major disruption to the existing online video market in Japan.

At present, the majority of Japan's online video services purchase rights from content distributors or studios. For example, U-NEXT has rights to content from almost 200 studios including the Hollywood majors. However, many operators have started offering original content in order to differentiate themselves from other services such as the UULA and dTV services from Avex Digital Business. Meanwhile, the Yahoo Japan owned service Gyao, which was launched in 2005, is operating a free advertising based model in partnership with over 300 content providers.

With broadband penetration at just over 75% in Japan by the end of 2014, the country is an attractive online video market for local and international companies. Consumer lifestyles continue to change in Japan with content consumption on internet-connected devices such as smart TVs, PCs, smartphones, tablets, and gaming consoles increasing. This bodes well for the success of the Bonobo service in Japan but as to whether it will successfully co-exist with several other major players will be determined by how well the service competes on price and its content offering.